Preparing chiles for use in recipes starts with roasting. This is usually done in rotating steel mesh cages over a flame source, searing the outer skin of the chile and cooking the flesh. After roasting the scorched skins are stripped off, the cap of the pepper is removed, and the inner seed vein is stripped.
The pepper can then be used in a variety of menu items. A personal favorite is chile relleno, with the cavity of the pepper stuffed with cheese, the stuffed pepper is breaded with batter, and then they are deep fried.
Most other uses call for the peppers to be chopped into small pieces. Probably the most common (and traditional) use is in green chile, a stew or soup made with pork and chiles (many recipes include tomatillos, onions, garlic, spices such as cumin and cilantro) in a sauce started with a roux of water or broth and flour.
Green chile may be served as a stew or soup, or it may be used as a topping for burritos, enchiladas, egg and cheese dishes, beans, rice, and other common menu items.
Probably as many recipes exist for green chile as there are chefs and families making it, and there is probably no absolutely correct method or really wrong way to do it. One of my personal favorites developed over many years has substituted cottontail rabbits for the pork ("the other white meat" don't you know?). We have also enjoyed green chile using venison, elk, and beef in lieu of pork.
The chiles grown in Hatch, New Mexico are well known and generally excellent, and they usually do pretty well here in Pueblo, Colorado (green chile capitol of the world) at our annual Chile and Frijole Festival. During the fall there are chile roasters set up all over the city, as well as the St. Charles Mesa in eastern Pueblo County, with locally grown chiles being roasted by the bushel for locals and folks who drive from a hundred miles around to stock up for the year.
Frozen roasted chiles freeze beautifully and are enjoyed as a staple in our diet.